Streaming-audio giant Spotify shelled out around €300 million, or about $337 million, to buy podcasting companies — producer Gimlet Media and services provider Anchor FM Inc., the company said.
The deals for Gimlet and Anchor, announced last week, were primarily in cash, with the total purchase prices subject to closing adjustments, Spotify disclosed the figure in a Feb. 13 SEC filing.
Spotify isn’t done with its M&A move into podcasting: The company told investors it expects to invest $400 million-$500 million in podcasting acquisitions for 2019. But that target includes what it’s paying for Gimlet and Anchor, chief content officer Dawn Ostroff told Variety, indicating the first two deals represent the lion’s share of its podcast investment for 2019.
“We’re looking at a broad range of opportunities,” Ostroff said in an interview. “The business is so nascent. A lot of what we’re doing is obviously strategically targeting this area that we want to be a leader in.”
Whether Spotify’s big bet on podcasting pays off remains to seen. CEO Daniel Ek sees a growth opportunity in the space, noting that Spotify’s podcast listeners spend twice as much time on the service as non-podcast listeners and that people listen to traditional radio on average two hours daily. At the same time, he admitted that podcasting is a relatively small business today.
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Brooklyn-based Gimlet set out to build “the HBO of audio,” Matt Lieber co-founder told Variety in 2017. The company has established itself in the podcast biz with popular scripted and unscripted shows, including “Homecoming” — adapted into a TV series by Amazon Studios — and “StartUp” and “Reply All.”
Gimlet had raised $28.5 million in funding from investors including WPP, Laurene Powell Jobs’ Emerson Collective, Cross Culture Ventures, Betaworks Ventures, Stripes Group, and Graham Holdings.
Anchor, based in New York, was founded in 2015 by Michael Mignano and Nir Zicherman. Described as a kind of YouTube for podcasts, Anchor claims it powers more than 40% of the industry’s new podcasts. The company had raised $14.4 million, according to Crunchbase, from investors including Accel, Acequia Capital, Betaworks, the Chernin Group, CrunchFund, Eniac Ventures, Nir Eyal, Omidyar Network, and Questlove.
With the podcast M&A strategy, Spotify forecast a full-year 2019 operating loss of between $228 million-$410 million (€200 million-€360 million) on revenue of $7.23 billion-$7.74 billion (€6.35 billion-€6.8 billion), up 21%-29% versus 2018. That’s after Spotify turned its first quarterly operating profit in Q4, of $107 million (€94 million).
Pictured above: Gimlet Media founder Alex Blumberg (l.) and Matt Lieber